Price Gouging: Southeast States Investigate
By Samantha Oller on Sep. 23, 2016HELENA, Ala. -- Colonial Pipeline Co. has successfully restarted Line 1, the main pipeline transporting gasoline to several Southeast states and the East Coast, thanks to a 500-foot bypass installed near the location of the leak in Shelby County, Ala. But don’t expect instant improvement to fuel supply issues, the operator cautioned.
“It is expected to take several days for the fuel delivery supply chain to return to normal,” the Alpharetta, Ga.-based company stated in an update. “Some markets served by Colonial Pipeline may experience, or continue to experience, intermittent service interruptions.”
Meanwhile, state agencies are reporting hundreds of consumer complaints of alleged price gouging. The following is a roundup of five of the states affected by the pipeline shutdown.
North Carolina
The state attorney general is investigating two more retailers over allegations of price gouging.
The retailers are unnamed, but one site is in Indian Trail and another in Raleigh, N.C. The complaints allege that the gas stations were charging $4.99 or more per gallon for gasoline.
More than 1,300 complaints have come in to the state’s Consumer Protection Division. So far, the attorney general has issued seven subpoenas seeking more information on costs to six gas stations and one wholesaler.
South Carolina
Inspectors have traveled the state watching for signs of price gouging at gas stations, but thus far have found few signs of it, according to South Carolina Gov. Nikki Haley.
“What we did is we had eight inspectors go out into the field and basically go around every region and check for price gouging and check for supplies,” Haley told local news station FOX Carolina. “So I found where the shortages were, and also found out where we had some price issues but it looks like it’s all controlled at this point.”
However, the state is investigating at least one complaint from a resident who saw gasoline priced at $2.99 per gallon at a gas station in Aiken County, up to $1 per gallon above other stations in the county.
Tennessee
The Tennessee Department of Commerce and Insurance (TDCI) had received almost 600 complaints of price gouging over the past weekend. This compares to 5,000 complaints it typically hears in one year.
“That’s off the charts for us,” Kevin Walters, communications director for TDCI, told a local news station. “We are in the midst of sorting through the overflow of complaints.”
Most of the complaints are against retailers in the Nashville market, and allege gasoline street prices ranging from $3 to $9.99 per gallon. The state attorney general will investigate them all, with the retailer facing a $1,000 fine per violation.
Georgia
Georgia’s attorney general is investigating around 200 complaints of price gouging. This includes two complaints that allege an Atlanta-area gas station was charging up to $4.69 per gallon, according to a local news station.
Meanwhile, Gov. Nathan Deal, who had issued an executive order reminding retailers of the state’s law against price gouging, extended another executive order that allows fuel truck drivers to work extended hours. It expires at midnight on Sept. 26.
Alabama
As Alabama regulators keep watch for retailers violating the state’s price gouging law, an economics professor for Auburn University in Auburn, Ala., is calling for the legislation to be repealed.
In a recent opinion piece, Alan Seals, associate professor and director of graduate studies for Auburn University’s Department of Economics, argued that Alabama’s price-gouging law exacerbates supply issues.
“When the government sets maximum allowable prices, presumably below what the market would otherwise bear, this discourages sellers from entering that market to provide more of those goods and encourages hoarding of those goods by citizens who were able to get in line first to buy what was available,” Seals said. From here, a black market forms for the price-controlled item, and prices only escalate.
Seals noted that Alabama’s price gouging law prohibits “unconscionable pricing” during states of emergency, which it defines as “a price that is 25% or more above the average price charged in the same area within the last 30 days—unless the increase can be attributed to a reasonable cost.”
Instead, the law should allow markets to function during a state of emergency, Seals said, which will keep consumption in check.
“If the price of gasoline increases from $1.80 to $5 over night, people take notice,” he wrote. “That price increase tells consumers gasoline has suddenly become more valuable and measures to conserve gasoline should be taken immediately.”